The silver price has fallen by almost 8.5% over the past week and a half. Support from buyers was found when the price went below $23 per ounce. Technical indicators suggest that the fall is excessive and there is a high probability of an upward rebound. If the bulls intercept the initiative, the nearest benchmark for the silver price growth will be the level of 24.
Demand for silver is now under pressure due to the growth of the dollar. According to FX Empire expert James Hyerczyk, the strengthening of the US dollar and high yields on Treasury bonds reduce the attractiveness of precious metals. The slowdown in the global economy is also not in favor of silver, as industry consumes half of the extracted metal.
Further dynamics of silver prices will become clearer on Wednesday. The inflation data for August is due out on September 13 in the US. July statistics reflected the first acceleration in price growth of the year. However, the figures for core inflation, which does not include food and fuel, maintain a gradual downward trend. If the dynamics of this indicator continues to meet the expectations of analysts, market participants may not react so sharply to the increase in the general inflation rate.
Analysts forecast growth of the general inflation rate from 3.2% to 3.6%. The core consumer price index growth rate, on the contrary, may slow down from 4.7% to 4.3%. The US inflation data is under scrutiny of both the Fed and traders in the metal markets. If the published price statistics will be in line with expectations, the probability of additional tightening of monetary policy will decrease. This will be an important factor for the silver and other precious metals price growth.
Both lines of the Stochastic indicator have fallen into the oversold zone. In mid-August, a similar signal preceded silver's upward momentum by more than 12%. Ahead of the Fed meeting on September 20, the price is unlikely to reach the level of 25, but 24 is definitely attainable.
The following trading strategy can be suggested:
Buy silver in the range of 22.9–23.2. Take profit — 24. Stop loss — 22.3.
Traders can also use a Trailing stop instead of a fixed Stop loss at their discretion.